Understanding QDROs and the Litman Excavating & Construction 401(k) Plan
When a marriage ends in divorce, dividing assets can be complicated—especially retirement accounts like the Litman Excavating & Construction 401(k) Plan. Under federal law, retirement plan assets cannot be split or assigned to anyone other than the employee—unless a Qualified Domestic Relations Order (QDRO) is issued.
If you or your spouse participated in the Litman Excavating & Construction 401(k) Plan, it’s important to understand how QDROs work, what specific issues apply to 401(k) division, and how to avoid costly mistakes. This guide helps explain how to divide this specific plan correctly and efficiently.
Plan-Specific Details for the Litman Excavating & Construction 401(k) Plan
Here is what we know about the plan:
- Plan Name: Litman Excavating & Construction 401(k) Plan
- Sponsor: Unknown sponsor
- Address: 20250805143458NAL0001285171001, 2024-01-01
- EIN: Unknown
- Plan Number: Unknown
- Industry: General Business
- Organization Type: Business Entity
- Participants: Unknown
- Plan Year: Unknown to Unknown
- Effective Date: Unknown
- Status: Active
- Assets: Unknown
Even though details like the EIN and plan number are currently unavailable, these will be required when submitting the QDRO to the administrator. Tracking these down early helps prevent delays in the review or approval process.
Why QDROs Matter for This Retirement Plan
The Litman Excavating & Construction 401(k) Plan is a defined contribution plan, meaning its value is based on the employee’s individual account balance. To divide it in divorce, a QDRO must be drafted and approved by both the court and the plan administrator. This legal order allows a portion of the account to be paid to an “alternate payee,” typically the ex-spouse.
QDROs must meet specific criteria established by the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. Without a QDRO, no division is legally permitted, regardless of what your divorce decree says.
Key Issues in Dividing a 401(k) Plan Like This One
Employee and Employer Contributions
401(k) accounts typically include both employee salary deferrals and employer contributions. With the Litman Excavating & Construction 401(k) Plan, both must be addressed separately in the QDRO. Many clients assume the account balance can be evenly split, but timing and contribution type matter. For example:
- Employee deferrals are generally 100% vested and available for division.
- Employer contributions may be subject to vesting schedules. Unvested amounts may be forfeited and cannot be divided.
The QDRO should only assign a portion of vested funds unless otherwise agreed and permitted by the plan.
Vesting Schedules
This plan likely has vesting rules that apply to employer contributions based on length of service. If the participant hasn’t worked for the employer long enough, the non-vested employer match could be forfeited upon termination. It’s essential to clarify what is vested as of the couple’s division date—especially if a court order assumes 50% division of the full account.
Loan Balances and Repayments
Many 401(k) participants take loans against their accounts. If there’s an outstanding loan at the time of division, it affects the available account balance.
There are two options:
- Calculate the alternate payee’s share including the loan amount (as if it’s still part of the account).
- Calculate the alternate payee’s share excluding the loan.
This detail must be included in the QDRO. If not clearly addressed, the alternate payee could receive less than intended—or litigation could result. It’s also important to know who’s responsible for repaying the loan, especially if it was taken after separation.
Roth vs. Traditional Contributions
The Litman Excavating & Construction 401(k) Plan may allow for both traditional tax-deferred contributions and Roth 401(k) after-tax contributions. Each has different tax implications:
- Traditional 401(k): Distributions are taxed as ordinary income when withdrawn.
- Roth 401(k): Distributions are normally tax-free after certain conditions are met.
QDROs should clearly state whether the division includes traditional, Roth, or both account types. If the funds are rolled over improperly—say, into a traditional IRA instead of a Roth IRA—it could result in unexpected taxes.
Timing Matters: Valuation Dates and Gains/Losses
With 401(k) plans like the Litman Excavating & Construction 401(k) Plan, your QDRO must specifically identify:
- The exact cut-off date for calculating the division (often the date of separation or divorce).
- Whether the alternate payee is entitled to gains/losses from that date to the date of distribution.
If gains or losses are excluded, the alternate payee could receive much less than expected—especially if the transfer is delayed.
Next Steps After Drafting
After drafting a proper QDRO, it must go through a few steps before benefits can be distributed:
- Submit the draft to the Plan Administrator for preapproval (if allowed).
- File the approved QDRO with the court for entry.
- Send the signed QDRO to the Plan Administrator for final processing.
Note that many plans reject QDROs that don’t meet their criteria or fail to specify things like loan treatment or account types. At PeacockQDROs, we know what these plans look for—we’ve dealt with thousands across all types of plans across the country.
Avoiding Common Mistakes
Some of the most common mistakes we see with dividing plans like the Litman Excavating & Construction 401(k) Plan include:
- Failing to request loan and vesting information before finalizing the QDRO
- Assuming an “equal split” means 50/50 of the entire balance regardless of vesting
- Leaving out instructions about gains or losses
- Not specifying Roth vs. traditional account types
Our article on common QDRO mistakes goes deeper into these pitfalls—and explains how to avoid them.
How PeacockQDROs Helps You Get It Right
At PeacockQDROs, we’ve completed thousands of QDROs from start to finish. That means we don’t just draft the order and leave you to figure out the rest. We handle the drafting, preapproval (if applicable), court filing, submission, and follow-up with the Plan Administrator. That’s what sets us apart from firms that only prepare the document and hand it off to you.
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. QDROs don’t have to drag on—check out our piece on how long QDROs take and what you can do to speed things up.
Conclusion
Dividing a 401(k) like the Litman Excavating & Construction 401(k) Plan doesn’t have to be overwhelming. If you understand how loans, unvested contributions, traditional vs. Roth accounts, and QDRO language interact, you’re already ahead.
Make sure your QDRO is drafted correctly, submitted to the right parties, and includes all necessary plan-specific information. That’s where professional guidance really pays off.
If your divorce was in California, New York, New Jersey, Connecticut, Kansas, Missouri, Iowa, or North Dakota, and you have questions about qualified domestic relations orders or dividing retirement assets like the Litman Excavating & Construction 401(k) Plan, contact PeacockQDROs. We specialize in QDROs and have successfully processed thousands of orders from start to finish.
Get the answers you need—explore our QDRO resources or reach out for personalized help if you’re in one of our service states.